EU Scales Back Punitive Textile Tariffs

James A. Morrissey, Washington Correspondent

W hen the Bush administration announced plans to levy protective tariffs on steel imports,
the European Union (EU) and other steel-producing nations said they would retaliate by levying
punitive tariffs on a number of U.S. products, including an extensive array of textiles and
apparel.

Now the EU has scaled back the list of targeted products. Under its revised list, knit
cotton blankets are the only products that will be subject to a 100-percent punitive tariff.
Products still on the list subject to a 30-percent increase in their tariffs include: woven cotton
and all man-made fiber blankets, tarpaulins, awnings, sails and camping goods.

The U.S. government contends the EU is acting illegally by imposing the tariffs before the
World Trade Organization (WTO) has ruled on whether or not they are allowed under WTO regulations.

CPSC Moves On Flammability Rule The Consumer Product Safety Commission (CPSC) is calling for public comments on its proposal
to issue a new standard covering upholstery fabric flammability. In its present form, the standard
is strongly opposed by textile manufacturers.

In a nutshell, the standard and its complicated test procedures would require upholstered
fabric to serve as a fire barrier from small open-flame sources such as candles, lighters and
matches.

Noting that there is no mandatory or voluntary standard covering upholstery, the CPSC says
upholstery-related fires account for more residential fire deaths than any other category of
consumer products, and a disproportionate number of these deaths occur in children under age 15.

While supporting the concept of taking steps to reduce the number of upholstery fires, ATMI
says the proposed standard is not the way to go. ATMI charges the CPSC is moving forward with the
proposed standard without accurately assessing the causes of furniture fires and injuries.

It contends the standard is not based on sound scientific research; it will limit consumer
choices; its test procedures are costly; and it will not accomplish the goal of reducing deaths and
injuries resulting from furniture fires.

Chinese Textile Exports Are Soaring As expected, Chinese textile and apparel exports have risen sharply since China’s admission
to the WTO this year — and the trend is likely to continue. Prior to China’s accession to the WTO
January 1, its textile bilateral quota agreement with the United States provided for an average
annual growth of about 1 percent.

But when China joined the WTO, it was entitled to “catch up” on a seven-year quota phase-out
enjoyed by other WTO members.

A sampling of recently decontrolled categories demonstrates just how quickly and effectively
China can move into quota-free markets. While U.S. imports from the world, including the major
Asian suppliers, were down during the first quarter of this year, Chinese exports showed huge
gains.

In the case of infantwear, Chinese exports were up threefold, while exports from other Asian
nations declined by as much as 50 percent. A similar pattern held true with luggage, brassieres,
gloves, knit fabrics, robes, dresses and gowns.

In some cases, the Chinese gains were made at the expense of Mexico, where many of the
exports contain U.S.-made fabric and yarn.

Charles Bremer, international trade vice-president for the American Textile Manufacturers
Institute (ATMI), expects the trend to continue and even increase during the second quarter. Bremer
says the trade pattern demonstrates China can produce “any product in any quantity at any price.”

That capability has aroused new concerns in the textile industry about what will happen when
all textile quotas are eliminated January 1, 2005, and tariffs will be the only means of limiting
import growth. The United States has so-called “safeguard” laws that permit it to impose quotas for
three years where market disruption occurs, but in the past, that has been a time-consuming,
expensive and often unsuccessful procedure.
July 2002